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Are we headed to something like the Great Depression?

There is clearly much to be worried about. Most of America's private retirement 401(k) accounts have significantly decreased in value since last autumn's crash. Home equity has plunged. The unemployment rate is above 7 percent and climbing.

We had negative GDP growth last quarter. Stock prices are the lowest in 10 years. Almost daily some company announces layoffs. Some big banks may be nationalized. The American auto industry will not survive as we have known it for nearly a century.

Abroad, the news is worse. European banks have lost trillions of euros in bad loans to Eastern Europe and Asia. Countries like Iceland, Ireland and Greece are teetering on insolvency. China's export industries may have to lay off millions of workers.

Given all that news, we are in a funny sort of depression. Our spiraling national deficit is being financed by China, Japan and other overseas concerns at almost no interest  saving the United States trillions of dollars in debt service costs.

Nearly 93 percent of those Americans in the workforce are still employed. The difference between what the banks pay out in interest on depositors' savings and what they charge borrowers for loans is one of the most profitable in recent memory.

The sudden crash in energy prices may be hurting Iran, the Gulf monarchies, Russia and Venezuela. Yet Americans, who import 60 percent of their transportation fuel, along with natural gas, have been given about a half-trillion-dollar annual reprieve. The reduced price of energy could translate into more than $1,500 in annual savings for the average driver, and hundreds of dollars off the heating and cooling bills for the homeowner.

For the vast majority of Americans with jobs, the fall in prices for almost everything from food to cars has, in real dollars, meant an actual increase in purchasing power. The loss in value of home equity is serious for those who need to relocate for work or want to downsize and move to an apartment or a retirement community. But when averaged over the last decade, real estate still shows a substantial annual increase in value.

Moreover, the vast majority of American homeowners  well over 90 percent  meet their mortgage payments. They have no plans to flip their homes for profit. For them, the fact that they have lost paper equity, or even owe more than their homes are currently appraised at, is scary  but not equivalent to a depression. Most are confident that after a few years their houses will appreciate again. As for now, working young couples have a chance to buy a house that would have been impossible just two years ago.

The same holds true for many retirement accounts whose decline is terrible for those retirees who count on drawing out each month what they put away or must cash out their depleted accounts at vastly reduced value.

But the majority of working Americans are not yet pulling out their sinking retirement funds. Most are still putting away pre-tax money each month, apparently confident that within a few years their portfolios will return to their former value. Some are even consoled that they are now buying mutual funds at rock-bottom prices rather than investing in sky-high investments at the peak of a bull market.

Times are bad for those out of work or those who bought expensive homes with paltry down payments. Yet for those hurting, there is a vast array of government help. Both private companies and public agencies offer all sorts of ways to either walk away from mortgage obligations or have them renegotiated. The same is true for credit-card debt.

Unemployment insurance, welfare, food stamps and even more new social programs on the way have redefined poverty from what our grandparents told us of the Great Depression.

I live in southeastern Fresno County, one of the poorest regions of a now nearly bankrupt California. Many people are hurting. Yet to go to the local Wal-Mart is to see late-model cars in the parking lots and plenty of cell phones, iPods and BlackBerrys among the shoppers. Carts are stuffed with consumer goods, lots of food and Easter confections.

So are we in a depression that justifies a vast redefinition of government and a massive takeover of the private sector? Not quite. What we are a witnessing instead is a sharp downturn from the most affluent era in the history of civilization. For the last two decades, we borrowed and spent as if there were no tomorrow. Now we are living in that tomorrow of cutting back and making do.

In relative terms, it is no longer 2005, but that does not mean it is 1932 either.

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Victor Davis Hanson, a classicist and military historian, is a senior fellow at the Hoover Institution and a recipient of the 2007 National Humanities Medal. Comment by clicking here.